Bank of Mum & Dad- parents owed over £13 billion by their kids
British parents are currently owed more than £13 BILLION – by their own kids, a study has revealed. Researchers found that bad or non-existent credit scores and struggling to get approval on a loan or credit card means that more than a quarter of cash-strapped Brits have turned to their parents for a loan during the last 12 months.
24% of 18-50 year olds have borrowed an average of £2,432 from their mum or dad (but still owe them £1,998 of that today).
That means that parents are a staggering £13,184,258,544 (over thirteen BILLION pounds) out of pocket across the UK.
However, a quarter admit that they worry that borrowing from Mum and Dad means they will struggle in the future because they aren’t creating their own credit score and financial history.
A spokesman for Amigo Loans, which commissioned the research said:
”Many of us have had to call on mum or dad for a loan at some point but it could be putting children at a financial disadvantage.
”It’s astonishing that so many adult kids aren’t able to get credit because they simply haven’t had it before.
”And, it’s staggering to think how much parents are collectively out of pocket for lending us money.
”While it might be easier, quicker and even cheaper for people to turn to their parents when they need some extra money help, it might not help in the long run.
”By relying on mum and dad for a financial boost every now and then, not only are you leaving them out of pocket, but it means you aren’t building up your own credit score to help you in the future.”
The study of 2,000 Brits revealed that the average adult will borrow £4,835 from their parents over a lifetime, and meeting simple day-to-day living expenses was found to be the most common reason for asking for help.
Needing to buy a new car was the number two reason for needing to borrow money, while losing a job was third.
Needing the cash for a deposit on a house, an emergency such as a boiler or car breakdown and paying off existing debts are also other reasons for a parental loan.
But more than half (56%) admitted that owing their parents cash does leave them feeling guilty, with 73% saying they are determined to pay their parents back as soon as possible so they don’t have the debt hanging over their relationship.
The study also revealed that almost one in ten have been turned down by their parents after asking for a loan, with another 14% saying they will if they ask for any more money in the future.
42% of those say their parents want them to stand on their own two feet from now on and 17% think their children need to start working on their own credit score by getting official credit.
However, 28% just can’t afford to part with the cash anymore.
It also emerged that parents are not only lending their children their own cash, but 26% have taken out a credit agreement in their mum or dads name due to their bad credit score or already having too much credit in their name for something like a mobile phone contract.
20% admit their parents have had to pay bills for them – to the tune of £354.86 in the past 12 months.
A spokesman for Amigo Loans added:
”Parents think they’re helping their kids out but they could be putting them at a financial disadvantage.
”With an Amigo Loan, parents can still help their kids but don’t have to part with the cash themselves; they’re also giving them a foot up on the credit ladder”
Top 10 reasons for borrowng money from mum and dad
1. Day to day living expenses
2. Buying a new car
3. I was/am unemployed
4. A house deposit
5. An emergency such as a boiler breakdown
6. A big purchase such as a washing machine
7. Paying off a credit card
8. Living expenses while at university
9. Paying off a loan
10. A wedding